Oct. 16 (Bloomberg) -- Prince Frog International Holdings
Ltd. plunged by the most on record after short-seller Glaucus
Research Group questioned the company’s sales and branded the
baby-care products maker a “strong sell.”

Prince Frog shares were halted in Hong Kong trading today
after dropping as much as 26 percent to HK$4.66, headed for the
biggest decline since its July 2011 listing.

The Chinese government’s tax records indicate Prince Frog’s
net income is “a fraction of reported figures,” Glaucus said
while initiating coverage of the shares at “strong sell.”
Queenie Hung from Wonderful Sky Financial Group, Prince Frog’s
public relations firm, declined to immediately comment and said
the company will issue a statement to the Hong Kong Stock
Exchange later today.

The allegations reflect the scrutiny that publicly traded
Chinese businesses are drawing from short-sellers. Vegetable
processor China Minzhong tumbled 48 percent, the most on record,
in less than two hours on Aug. 26 after Glaucus questioned the
company’s accounts in a report. Minzhong said it “strongly”
denied the allegations.

Glaucus’s statements on its performance were made with the
sole objective of driving down the company’s share price and
gaining from the decline, Minzhong said in a September
statement. Its shares have more than doubled since its Aug. 26
close, recovering from its decline after PT Indofood Sukses
Makmur, controlled by Indonesian billionaire Anthoni Salim’s
investment company, offered S$488 million ($393 million) cash
for the rest Minzhong, which it already had a stake in.

Baby Care

Besides Minzhong Food, China Metal Recycling Holdings Ltd.
and China Medical Technologies Inc. have each separately been
the focus of reports by Glaucus. Liquidators were appointed to
China Metal in July and China Medical filed for Chapter 15
foreign-firm bankruptcy protection in New York last year.

Glaucus, which has an office in Newport Beach, California,
was founded by Matthew Wiechert, who has a background in
investment banking, to probe companies that appear “too good to
be true,” according to its website.

Prince Frog, based in southern China’s Fujian province,
sells skin care, bath products, oral care items, and diapers for
children, according to its annual report. It reported a 31
percent rise in profit to 241.1 million yuan ($40 million) last
year. Marketing investments and advertising with popular Hong
Kong singer Kelly Chen boosted awareness of its brand, it said
in the annual report. It also cited sales gains from selling on
Chinese e-commerce sites such as T-Mall and expanding in
hypermarkets such as Wal-Mart Stores Inc. and Carrefour SA.

Prince Frog posted revenue of 1.6 billion yuan last year,
double the 838 million yuan it reported in 2010, according to
data compiled by Bloomberg. As of yesterday’s close, its stock
had more than doubled from its IPO price of HK$2.60 a share.

Ten of the 11 analysts covering Prince Frog recommend
investors buy the stock, while one rates the stock a hold,
Bloomberg data show. The stock is still up 43 percent so far
this year.